Fuel Subsidy Removal in Nigeria: Problems and Prospects

Abstract

This study explains the need for fuel subsidy removal and
its impact on Nigerians. The policy of fuel subsidy
removal was informed by the need to reinvest the huge
amount of money that was formerly used for subsidy into
the critical sectors of the economy. The main objective of
the study is to determine the effect of the removal of fuel
subsidy on Nigerians. Specific objectives include to: (i)
ascertain the effect of fuel subsidy removal on Nigerians,
especially the low income households.(ii) identify the
problems created by the removal of fuel subsidy (iii)
proffer solutions to the problems of the removal of fuel
subsidy in Nigeria. The theory used to explain the removal
of fuel subsidy is ‘Public Choice theory.’’ The method of
data collection is secondary source. Some of the major
findings of the study are that: the introduction of fuel
subsidy has brought economic hardship to Nigerians,
especially the low income house holds. The government
has not done enough to address the problems caused by
the introduction of fuel subsidy removal in Nigeria.
Similarly some of the major recommendations are that the
government should implement a Social Safety Net
Program, by Providing financial assistance to vulnerable
populations, such as the poor, elderly, and disabled, to
help them cope with the increased cost of living.
Government should provide support for small businesses,
such as loans and grants, to help them cope with the
increased cost of doing business, occasioned by the fuel
subsidy removal.